Home Purchase Decisions

  • Rent or Buy Decisions
    • See Table 15.1 The Mallorys’ Homeownership Decision
    • Tax consequences of rent versus mortgage payments
    • Alternative investments
    • Inflation and deflation of home prices
    • Impact of mortgage interest rates
      • See Table 15.2 Mortgage Loan Repayment Schedule
      • See Table 15.3 Impact of Interest Rates on a 30-Year loan
    • Period of ownership
      • Generally the longer the period of ownership the greater return on the investment
      • See Table 15.4 The Mallorys’ Rent-versus-Buy Analysis – Ten Year Ownership Period
  • Rent or Buy Decisions: Some Conclusions
    • Economic decision depends on assumptions made
    • Decision might rest on non-economic decisions as well
  • How Much House Can You Afford?
    • Calculate income
      • See Table 15.5 The Mallorys’ Estimated Monthly Income
    • Calculate payments and apply qualifying ratios
    • Calculate expenses
      • See Table 15.6 The Mallorys’ Monthly Payments
    • See Close-Up “Prequalified vs. Preapproved”
  • Choosing a Property
    • Choosing an area
      • Property taxes and quality of public services
      • Recreational facilities
      • Quality of school system
      • Crime statistics
      • Overall quality of the community
    • Evaluating the individual home
      • Attic
      • Walls, ceilings and floors
      • Roof
      • Basement or crawl space
      • Electrical system
      • Mechanical systems
        • Heating and cooling systems
      • Water supply and waste disposal
      • See Case Study “The House that Came off the Mountain”
  • Making and Closing the Deal
    • Real estate agents
    • Negotiating the price
    • Dealing with the lender
    • Closing attorneys and escrow agents
  • Selling the Home
    • Preparing the house for sale
    • Setting the asking price
    • Choosing a real estate agent
    • The sale